SII Sprott Inc

TORONTO, Aug. 11, 2011 /CNW/ -- TORONTO, Aug. 11, 2011 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three and six month periods ended June 30, 2011. Q2 2011 Highlights -- Assets Under Management ("AUM") were $9.3 billion as at June 30, 2011, compared to $5.5 billion as at June 30, 2010 and $9.7 billion as at March 31, 2011 -- Management Fees were $37.2 million, an increase of 53.8% compared with the second quarter of 2010 -- Base EBITDA was $18.1 million ($0.11 per share), compared with $10.3 million ($0.07 per share) in the second quarter of 2010, an increase of 76.4% -- EBITDA was $14.6 million ($0.09 per share), compared with $11.4 million ($0.08 per share) in the second quarter of 2010, an increase of 28.3% -- Net income decreased by 3.6% to $7.5 million ($0.04 per share), from $7.8 million ($0.05 per share) in the second quarter of 2010 -- Sprott Physical Gold Trust completed US$341 million follow-on offering -- Launched Sprott Silver Bullion Fund Subsequent events: -- Sprott Strategic Fixed Income Fund completed $220 million Initial Public Offering -- Sprott Physical Gold Trust completed US$306 million follow-on offering -- Paul Meehl named CEO of the Global Resource Investments, Ltd. "We recently reached a significant milestone in the evolution of our organization, with the assets under management of the Sprott Group of Companies surpassing $10 billion," said Peter Grosskopf, CEO of Sprott. "The continued growth of our business has been driven by the introduction of new products and the expansion of our successful line of bullion funds, which together have raised more than $600 million, year-to-date." "Broadening our product lineup remains a top priority and we are pleased with investor response to our line of fixed-income products, which we launched in 2010," continued Mr. Grosskopf. "We recently added to this product suite through the successful launch of the Sprott Strategic Fixed Income Fund, which raised more than $220 million in gross proceeds through its Initial Public Offering in July." "While the correction in the price of precious metals and related equities impacted the performance of some of our funds during the second quarter, both gold and silver have recovered recently, with gold prices continuing to reach record highs," added Mr. Grosskopf. "We believe the positioning of our funds remains strong, as markets begin to feel the pressure from weak economic conditions, continuing government debt and financial sector issues, as well as the long-term loss of currency purchasing power." "The integration of the Global Group of Companies continues, with Paul Meehl recently hired to head our U.S. brokerage business," concluded Mr. Grosskopf. "Paul has a strong operational background and will play a key role in the integration process, as we work to leverage the strength of the Sprott brand and increase our presence in the U.S. marketplace." _____________________________________________________________________ | | For the |For the three| | | | | three | |For the six |For the six | | $ millions |months ended|months ended |months ended |months ended | | | June 30, |June 30, 2010|June 30, 2011|June 30, 2010| | | 2011 | | | | |______________|____________|_____________|_____________|_____________| |AUM, beginning| 9,678| 5,155| 8,545| 4,774| |of period | | | | | |______________|____________|_____________|_____________|_____________| |Net sales | 565| 104| 825| 521| |______________|____________|_____________|_____________|_____________| |Business | —| —| 695| —| |acquisition | | | | | |______________|____________|_____________|_____________|_____________| |Market value | | | | | |appreciation | (951)| 287| (773)| 251| |(depreciation)| | | | | |of portfolios | | | | | |______________|____________|_____________|_____________|_____________| |AUM, end of | 9,292| 5,546| 9,292| 5,546| |period | | | | | |______________|____________|_____________|_____________|_____________| Assets Under Management At June 30, 2011, AUM increased by 67.5% to $9.3 billion, from $5.5 billion at June 30, 2010.  When compared to AUM of $9.7 billion at March 31, 2011, AUM decreased by 4.0% during the second quarter. The increase in AUM at the end of the second quarter of 2011, when compared to the second quarter of 2010, resulted from a combination of the addition of $0.7 billion in AUM through the acquisition of the Global Group of Companies, strong net inflows and $1.3 billion of market value appreciation of Funds, Managed Accounts and Managed Companies. Net sales for the quarter were $565 million, compared with net sales of $104 million for the quarter ended June 30, 2010. During the quarter, $363 million of the net sales came from the follow-on offering of Sprott Physical Gold Trust Units and the launch of the Sprott Silver Bullion Fund. The remaining net sales were spread across Sprott's domestic mutual and hedge funds as well as the Company's offshore funds. In addition, Sprott Resource Lending Corp. ("SRLC") also contributed to net sales, through the continued transition of its real estate lending portfolio to its resource lending portfolio. Average AUM for the quarter ended June 30, 2011 was $9.9 billion, compared with $5.4 billion for the second quarter of last year. Income Statement Total revenue for the quarter ended June 30, 2011 increased by 47.7% to $39.3 million, from $26.6 million in the second quarter of 2010. For the six months ended June 30, 2011, total revenue increased by 50.6% to $78.8 million from $52.3 million in the first six months of 2010. Management fees increased by 53.8% during the quarter to $37.2 million, from $24.2 million in the second quarter of 2010, as average AUM increased by approximately 83.6% over the same period last year. Management fee margins fell to 1.5% from 1.8% in the second quarter of 2010. The decrease is mainly due to the significant growth in bullion funds, which have a lower management fee than the majority of the other Sprott Funds. For the first six months of 2011, management fees increased by 53.3% to $72.8 million from $47.5 million in the first half of 2010. Losses from proprietary investments, which include investments in funds that Sprott manages, an investment in SRLC, certain other resource-related stocks and warrants, and gold and silver bullion, totaled $4.0 million for the second quarter of 2011, compared with a gain of $0.9 million in the second quarter of 2010. For the six months ended June 30, 2011, losses from proprietary investments totaled $3.6 million, compared with a gain of $0.5 million during the first six months of 2010. Commission revenue for the quarter ended June 30, 2011, was $4.9 million compared to $0.4 million during the prior year period. In the second quarter of 2011, commission revenue was mainly due to commissions generated by Global Resource Investments, Ltd. and, to a lesser extent, Sprott Private Wealth LP. For the six months ended June 30, 2011, commission revenue increased by $4.9 million to $7.9 million from $3.0 million during the prior year period. Other income decreased by $0.2 million in the second quarter of 2011 to $0.6 million from $0.8 million for the second quarter of 2010. For the six months ended June 30, 2011, other income decreased by $0.2 million to $1.0 million from $1.2 million during the prior year period. Total expenses for the quarter ended June 30, 2011 were $28.1 million, an increase of $12.3 million or 78.3%, compared with $15.8 million for the second quarter of 2010. Total expenses for the first six months of 2011 were $52.7 million, an increase of 63.3% from $32.2 million in the six months ended June 30, 2010. The increase during the quarter and first half of 2011 is primarily due to the acquisition of the Global Group of Companies (including the amortization of the related intangible assets and earn out shares) and higher costs associated with the growth of the business, including higher compensation and benefits expenses. Base EBITDA, which excludes the impact of income taxes and certain non-cash expenses and gains or losses on proprietary investments, increased by 76.4% to $18.1 million ($0.11 per share) for the second quarter of 2011, compared with $10.3 million ($0.07 per share) in the second quarter of 2010. For the six months ended June 30, 2011, Base EBITDA increased by 70.0% to $35.1 million from $20.6 million in the first half of 2010. Net income for the quarter ended June 30, 2011 was $7.5 million ($0.04 per share) as compared with net income of $7.8 million ($0.05 per share) in the second quarter of 2010. The decrease was mainly attributable to the decline in the market value of portfolios and proprietary investments during the quarter. Net income for the first six months of 2011 was $18.1 million ($0.11 per share), a 27.2% increase over the $14.2 million ($0.09 per share) earned during the first half of 2010. Dividends On June 1, 2011, a dividend of $0.03 per common share was declared for the quarter ended March 31, 2011. This dividend was paid on June 27, 2011 to shareholders of record at the close of business on June 10, 2011. In August 2011, a dividend of $0.03 per common share was declared for the quarter ended June 30, 2011. Conference Call and Webcast A conference call and webcast will be held today, Thursday, August 11, 2011, at 10:00am ET to discuss the Company's financial results. To access the call, please dial 647-427-7450 or 1-888-231-8191 ten minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until Thursday, August 18, 2011 by calling 416-849-0833 or 1-800-642-1687, reference number 88279336. The conference call will also be webcast live at www.sprottinc.com and www.newswire.ca. An archived replay of the webcast will be available for 365 days. *Non-IFRS Financial Measures This press release includes financial terms (including AUM, EBITDA, Base EBITDA, Cash Flow from Operations and net sales) that the Company utilizes to assess the financial performance of its business that are not measures recognized under International Financial Reporting Standards ("IFRS"). These non-IFRS measures should not be considered alternatives to performance measures determined in accordance with IFRS and may not be comparable to similar measures presented by other issuers. For additional information regarding the Company's use of non-IFRS measures, including the calculation of these measures, please refer to the "Non-IFRS Financial Measures" section of the Company's Management's Discussion and Analysis and its financial statements available on the Company's website at www.sprottinc.com and on SEDAR at www.sedar.com. Forward-Looking Statements This release contains "forward-looking statements" which reflect the current expectations of the Company. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements including, without limitation, those listed under the heading "Risk Factors" in the Company's annual information form dated March 22, 2011. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this release. Although the forward-looking statements contained in this release are based upon what the Company believes to be reasonable assumptions, the Company cannot assure investors that actual results, performance or achievements will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and the Company does not assume any obligation to update or revise them to reflect new events or circumstances. About Sprott Inc. Sprott Inc. is a leading independent asset manager dedicated to achieving superior returns for its clients over the long term. The Company currently operates through four business units: Sprott Asset Management LP, Sprott Private Wealth LP, Sprott Consulting LP, and Sprott U.S. Holdings Inc.  Sprott Asset Management is the investment manager of the Sprott family of mutual funds and hedge funds and discretionary managed accounts; Sprott Private Wealth provides wealth management services to high net worth individuals; and Sprott Consulting provides management, administrative and consulting services to other companies, including Sprott Resource Corp. (TSX: SCP), Sprott Resource Lending Corp. (TSX: SIL) (NYSE AMEX: SILU) and Sprott Power Corp. (TSX: SPZ). Sprott U.S. Holdings Inc. includes Global Resource Investments Ltd, Terra Resource Investment Management Inc., and Resource Capital Investments Corporation. Sprott Inc. is headquartered in Toronto, Canada, and is listed on the Toronto Stock Exchange under the symbol "SII". For more information on Sprott Inc., please visit www.sprottinc.com. To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/August2011/11/c3051.html p bInvestor contact information:/b (416) 203-2310 or 1 (877) 403-2310 or a href="mailto:ir@sprott.com"ir@sprott.com/a. /p

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